Bernanke, Ben

One caveat for the future is that the recent rapid escalation in house prices--11 percent in 2004, according to the repeat-transactions index constructed by the Office of Federal Housing Enterprise Oversight--is unlikely to continue. A plausible scenario is that house prices will either move sideways or rise more slowly during the next few years, eventually bringing the rate of return on housing in line with the relatively low prospective rates of return that we currently observe on virtually all assets, both real and financial. If the increases in house prices begin to moderate as expected, the resulting slowdown in household wealth accumulation should lead ultimately to somewhat slower growth in consumer spending.